Is this the 4th law of motion?

Dear Reader, Warren Buffett published his annual letter to Berkshire Hathaway shareholders on Saturday. Arguably the greatest investor of all time, Buffett is known for his timeless insights about investing while using very approachable language. Lately, I’ve been thinking about something he said in his 2005 letter: Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac’s talents didn’t extend to investing: He lost a bundle in the South Sea Bubble, explaining later, “I can calculate the movement of the stars, but not the madness of men.” If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases. Newton was a pretty intelligent guy. Much of what we’re taught in high school physics and calculus can be traced back to him. And apparently, he had a pretty good track record as a diversified, buy-and-hold investor. That was before he got crushed speculating on shorter-term swings in the stock market. When markets make sharp moves up or down for whatever reason, it can be very tempting to stray from your long-term investment plan and ramp up your short-term trading activity. While there may be some opportunities you can correctly exploit, there’s also the very high risk that you mistime the market. With every trade comes not one but two decisions. If you decide to buy, you also have to know what conditions you would choose to sell. Similarly, suppose you’re thinking about trimming your exposure to stocks because you think the market will go lower in the short term. In that case, you also have to consider what conditions you would buy to get back to your target long-term asset allocation. These are all good questions to ask up front as you formulate your investment plan. Perhaps the most important element of prudent investing is having a good plan. By the way, Newton’s folly was not that he got involved in the South Sea Bubble. Instead, it’s the fact that he was trading in and out of it. From WSJ columnist Jason Zweig: “If Newton had bought and held his South Sea shares continuously from early 1712 through 1723 when the stock stabilized after the bursting of the bubble, he would have earned a cumulative total return of approximately 116%. …However, Newton didn’t buy and hold continuously.” I think we can learn a valuable lesson from Newton’s mistakes. We’re investing for the long term. So, while current events might be causing you unease, it is important to keep in mind that we are investing for the long haul. [image] Andrew Graham Editor, Silver Ridge Market Report P.S. The guys over at [Advantage Gold]() know there is a lot of misinformation out there when it comes to gold. That’s why they’ve agreed to send you their book [The Great Devaluation]() absolutely free, you don’t even need to pay shipping and handling. If you are looking to protect your investments from a yet unforeseen event, [it’s worth the read.]() 316 Media and Silver Ridge Market Report, is not giving individualized financial advice. Never invest more than you are willing to lose. 316 Media or Silver Ridge Market Report is not giving financial, investment, or stock advice. Our content is designed for generalized informational purposes only. If you have specific questions about investments or stocks you should consult a financial advisor. Articles, News, Or Other published materials are not always the views of 316 Media and/or Silver Ridge Market Report. If you feel you are receiving these emails in error please email Support@SilverRidgePro.com or click the unsubscribe button below. [Unsubscribe]( Silver Ridge Media 30 N Gould St, Ste R Ste R Sheridan, Wyoming 82801 United States